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Amazon yesterday said that it will spend about $1 billion to acquire PillPack, an online pharmacy business that, as the New York Times writes, “distributes pills in easy-to-use packages designed for consumers with chronic conditions and multiple prescriptions. The company sorts prescriptions by the dose and includes a label with a picture of each pill and directions on how it should be taken.”

The Times writes that with this one move, Amazon “answered the question about when — and how — it would grab a piece of the $560 billion prescription drug industry.” And, “it was precisely the sort of deal that the health care industry had feared.

“Amazon has been hinting at its interest in selling drugs, but it faced the problem of securing pharmacy licenses in each state. PillPack will help overcome that hurdle, since the start-up is licensed to ship drugs in 50 states - clearing the way for the e-commerce giant to quickly become a major player in the business … After early tussles with pharmacy-benefit managers like Express Scripts, PillPack also managed to work with major benefit managers and insurers, not an easy feat for an online pharmacy that directly competes with many of those companies’ mail-order businesses.”

CNBC notes that in making the deal, Amazon outmaneuvered Walmart, which had been in talks to acquire PillPack “for months,” offering around $700 million.

After the announcement of the deal, for what it’s worth, Walmart, Walgreen and CVS all saw their share prices go down.
KC's View:
I do think that this is a big deal, because I suspect that Amazon is going to be able to drive both greater distribution and lower prices, which will make PillPack even more relevant.

I can see it now. PillPack Prime.

Jeff Bezos strikes again. Yikes.

By the way, it isn’t just Walmart and Walgreen and CVS that need to be concerned. It also is any retailer with a pharmacy. And, out of curiosity, what does this mean to Albertsons’ Rite Aid acquisition … because owning Rite Aid, which tends to operate stores that in my experience tend to the mediocre, may suddenly not look like quite the slam dunk competitive advantage that it did a few months ago.